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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Tesla shareholders’ 2024 vote did not erase a court judgment already entered against the 2018 Musk pay award. The Delaware Supreme Court later changed the outcome: on December 19, 2025, it reversed the rescission remedy and reinstated the 2018 plan. The vote and the appellate ruling were separate events, with different legal effects.
What was the 2018 Tesla pay award?
The 2018 CEO Performance Award was a package of stock options, not a cash salary payment. It divided the options into 12 tranches tied to Tesla market-capitalization and operational milestones. The Delaware Court of Chancery described the award’s maximum value as $55.8 billion and its grant-date fair value as $2.6 billion; those figures are different valuation measures, not amounts of cash paid to Musk. The court’s January 30, 2024 post-trial opinion discusses the award and its terms.
Why did the original shareholder approval face a lawsuit?
A Tesla stockholder brought a derivative suit—a case brought on the company’s behalf—challenging the award. After trial, the Court of Chancery found that Musk had transaction-specific control over this compensation decision and applied entire-fairness review. It concluded that the defendants had not shown the award was entirely fair, and found shortcomings in disclosures related to the original shareholder approval. The court ordered rescission of the 2018 award. In the court’s words, “The court also concluded that the Defendants failed to demonstrate that the transaction was entirely fair.”
The control finding was about influence over this transaction and the board process, not majority ownership of Tesla. The Chancery court described Musk as holding 21.9% of the company’s voting power at the time; it did not find that he mathematically controlled a majority of votes. The opinion explains the court’s control and fairness analysis.
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Why didn’t the 2024 shareholder vote settle the case?
Tesla put the 2018 award back to shareholders in 2024, adding disclosures that included a copy of the Chancery court’s decision. A majority of disinterested shares voted in favor. But this vote happened after the trial court had ruled and ordered rescission; it was not the original approval considered at trial.
Tesla then asked the Chancery court to revise its judgment. The court declined in the circumstances before it, considering the timing and procedural posture of the proposed ratification, as well as disclosure and fiduciary-law issues. In other words, the later vote did not automatically vacate the existing judgment. The Delaware Supreme Court’s account of the vote and the ensuing proceedings is in its December 19, 2025 opinion.
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Tesla’s 2024 proxy also cited a possible accounting charge in excess of $25 billion if the company had to formulate a new pay package. The Supreme Court recounted that as Tesla’s stated rationale; it was not a court finding that such a charge was actually incurred. See the Supreme Court’s account of Tesla’s position.
How did the case’s outcome change on appeal?
On December 19, 2025, the Delaware Supreme Court reversed the rescission remedy and reinstated the 2018 plan, while awarding the plaintiff nominal damages. It also awarded plaintiff’s counsel fees on a quantum-meruit basis, plus expenses. The appellate judgment—not the 2024 shareholder vote alone—restored the plan. The Supreme Court’s disposition states: “We reinstate the 2018 plan and award the Plaintiff nominal damages.”
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The opinion also recounts that the award’s milestones had been achieved and that, by January 2023, all 303,960,630 options were vested and in-the-money, as the plaintiff acknowledged. That describes the options’ status in the court record; it is not a new independent valuation or evidence that Musk had received that amount in cash. The Supreme Court opinion describes the record.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How are Musk’s later Tesla awards different?
The appellate ruling dealt with the 2018 plan. Tesla’s 2025 compensation actions are separate awards with their own conditions, as described in its Form 10-K for the fiscal year ended December 31, 2025, filed in 2026.
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| Award | Size and timing | Terms and reported accounting |
|---|---|---|
| Interim award | 96.0 million restricted shares, granted August 3, 2025 | Subject to a two-year service condition and a purchase price of $23.34 per share. Provisions address reducing or forfeiting the interim shares if the 2018 award becomes exercisable, to prevent a double benefit. Tesla reported a $26.06 billion grant-date fair value and said it had recorded no related compensation expense as of December 31, 2025, because vesting was not deemed probable. Tesla’s 2025 Form 10-K. |
| 2025 CEO Performance Award | Approximately 423.7 million shares, granted September 3, 2025; approved by shareholders November 6, 2025 | Includes 12 tranches with market-capitalization and operational milestones, as well as service and vesting conditions. This is a separate award, not the 2018 plan reinstated on appeal. Tesla’s 2025 Form 10-K. |
What the vote did—and did not—decide
The 2024 vote showed that a majority of disinterested shares supported the award after Tesla made additional disclosures. It did not, by itself, undo the trial court’s judgment. That judgment’s remedy changed only when the Delaware Supreme Court ruled on appeal in December 2025. The later interim and performance awards are distinct from that appellate result.
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